Medicare Advantage offers Medicare benefits through private insurance plans, as an alternative to traditional Medicare. The federal Centers for Medicare and Medicaid Services (CMS), the agency that runs Medicare, pays these private plans on a capitated basis — a per person, per month rate to cover health care services for each enrollee. Every year, CMS is statutorily required to update how much Medicare Advantage plans are paid to cover their enrollees. The rates are revised upward or downward, largely driven by how CMS updates two things: 1) the benchmark, or the maximum amount the federal government will pay plans for an average person in each county, and 2) the risk adjustment model, which CMS uses to modify payments based on enrollees’ expected health care costs.
Read the full article: How the Government Updates Payment Rates for Medicare Advantage Plans //
Source: https://www.commonwealthfund.org/publications/explainer/2024/mar/how-government-updates-payment-rates-medicare-advantage-plans